Amazon is withdrawing from free shipments from Whole Foods. Now, it’ll cost you $ 9.95 to get an order of organic milk and refined olives right at your doorstep.
It’s a signal that even the biggest of the retail giants are now passing the extra shipping costs and other expenses on to consumers.
Deliveries are a headache for grocers – refrigerated trucks, sealed windows for those perishable foods, and driver salaries. These costs add up quickly for retailers.
“Maybe seven dollars a delivery,” said Sucharita Kodali, retail analyst at Forrester. It’s just not a service that makes a lot of sense. “Grocery shopping, at the best of times, is a very low-margin business, and when you add the extra delivery, it’s just not profitable,” she said.
Whether it’s parking, packing, or delivering, people don’t like paying for things that aren’t real products. That’s why many retailers often only reveal fees when it comes to checkout, said Ayelet Fishbach, a professor at the Booth School of Business at the University of Chicago.
“At this point, you’re probably too tired to pay attention to this cost. You’re already too invested in doing the grocery shopping so you’re likely to buy, ”Fishbach said.
And in this economy, the expense can seem inevitable, said Mintel’s Diana Smith.
“With the current situation of inflation rates and rising prices that retailers have to absorb, unfortunately they have to pass some costs on to consumers. And it’s risky, ”she said.
Risky because some customers will reject these costs – like Henry Corelle, who used to get deliveries from Whole Foods two or three times a month in Chicago. Last winter it sometimes received deliveries more often when it was freezing for weeks.
“The ability not to leave home was spectacular,” he said.
But Corelle is not happy with the fees.
“It seems tricky besides already paying for this annual subscription to Amazon Prime,” he said.
Corelle is shopping at Target now. But he said he could be less cranky about Whole Foods’ fees when the snow falls.